A measurable signal that shows rising exposure to operational risk, for example staff turnover or failed trades. Thresholds trigger escalation.
Where you will meet it
Key risk indicator comes up in 7 learning outcome notes across the FRM syllabus.
A few of them:
Operational Risk FRM Part I · Valuation and risk models
“Key Risk Indicators (KRIs) are measurable metrics, such as failed trades, staff turnover, system downtime or overtime hours, tracked regularly with thresholds that trigger escalation.”
Introduction to Operational Risk and Resilience FRM Part II · Operational risk and resilience
“Its parts are governance with a three-lines-of-defence structure, a board-approved risk appetite, risk and control self-assessments, loss data collection, key risk indicators, scenario analysis, reporting and, where required, capital.”
Risk Governance FRM Part II · Operational risk and resilience
“It reviews risk profile, key risk indicators and losses, and escalates upward.”
Risk Governance FRM Part II · Operational risk and resilience
“It mixes qualitative statements with quantitative metrics such as key risk indicators, loss limits and escalation triggers.”
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